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January 20, 2004

Alstom moves to arrest Festival ships

Passengers from Festival Cruises European Stars were being flown home from Barcelona, Spain, today, instead of heading for the Canary Islands. The ship arrived in Barcelona Sunday morning from Genoa, Italy, but was detained in port as a result of a lawsuit brought by Alstom, parent of the ship's builder, Chantiers de l'Atlantique.

A second ship, Mistral, reportedly was detained in Marseille, France, after passengers had disembarked. Alstom has reportedly started proceedings for the detention of a third vessel, European Vision, currently at Sea in the Caribbean.

A release issued by Alstom yesterday noted that "in the past" the group had "provided vendor financing to certain purchasers of its equipment, particularly in the Marine Sector."

Alstom says its total outstanding marine vendor financing was Euros 650 million as of September 30, 2003, including financing of three cruise ships delivered to Festival : Mistral (1999), European Vision (2001), and European Stars (2002).

"Given Festival's failure to meet its contractual financial obligations," says the Alstom statement, "the owners/creditors, including Alstom, have launched the process of immobilizing these ships and terminating the charter arrangements with Festival."

Alstom says its exposure with respect to Festival is Euros 176 million, "assuming that the value of the three cruise ships is zero. Based on a prudent estimate of the re-sale value of the ships, ALSTOM considers that its direct and indirect interests in the ships (100% on Mistral, 9.5% on European Vision and 10.5% on European Stars) adequately cover this exposure."

Alstom estimated the market value of the 1,200 passenger Mistral at $138-$165 million, compared with an original sale price of $244 million, and the 1,550 passenger European Vision and European Stars at $180-$215 million apiece, compared with their sale price of $270 million each

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